Leases - The Company as a Lessor

9 Months Ended

Sep. 30, 2025

The Company leases real estate property to tenants under operating leases and sales-type leases. Such activity is primarily composed of operating leases within its CRE segment.

The historical cost of, and accumulated depreciation on, leased property under operating leases as of September 30, 2025, and December 31, 2024, were as follows (in thousands):


	September 30, 2025		December 31, 2024
Leased property - real estate	$	1,654,302	$	1,638,098
Less: accumulated depreciation	(276,885)		(255,483)
Property under operating leases - net	$	1,377,417	$	1,382,615

In March 2025, the Company entered into a ground lease agreement for a 4.7-acre land parcel located within Maui Business Park. Management evaluated the agreement in accordance with ASC 842 and determined that it met the criteria for classification as a sales-type lease. Accordingly, $5.0 million of land was derecognized and the present value of the future lease payments and the initial unguaranteed residual value of $9.2 million was established as Investments in sales-type leases, net in the Company's condensed consolidated balance sheets. As a result, the Company recognized $4.1 million in selling profit from sales-type leases within Gain (loss) on commercial real estate transactions in the Company's condensed consolidated statements of operations during the nine months ended September 30, 2025.

As discussed in Note 3 – Real Estate Transactions, in September 2025, the lease of two subdivided units at one CRE industrial property met the criteria for classification as a sales-type lease after the lessee exercised its option to purchase the units and the modified lease classification was re-evaluated. Accordingly, $10.3 million of real estate property, net and $1.2 million of real estate intangible assets, net were derecognized and the present value of the future lease payments and the initial unguaranteed residual value of $14.1 million was established as Investments in sales-type leases, net in the Company's condensed consolidated balance sheets. Additionally, the Company recognized $2.6 million in selling profit from sales-type leases within Gain (loss) on commercial real estate transactions in the Company's condensed consolidated statements of operations during the three and nine months ended September 30, 2025.

Refer to Note 5 – Fair Value Measurements for additional discussion of the inputs used to determine the fair value of net investment in sales-type lease assets.

The components of the Company's investments in sales-type leases, net as of September 30, 2025 was as follows (in thousands):


	September 30, 2025
Present value of lease payments	$	9,967
Unguaranteed residual assets	13,771
Investment in sales-type leases	23,738
Less: CECL sales-type leases	(44)
Investments in sales-type leases, net of allowances (credit losses)	$	23,694

Rental income (i.e., revenue) under operating leases and sales-type leases during the three and nine months ended September 30, 2025 and 2024, were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Operating leases:
Lease payments	$	34,675	$	33,941	$	103,178	$	101,118
Variable lease payments	16,106		15,875		49,705		47,626
Revenues deemed uncollectible, net	(744)		(363)		(1,193)		(960)
Total rental income from operating leases	$	50,037	$	49,453	$	151,690	$	147,784

Sales-type leases:
Interest income	$	266	$	—	$	538	$	—
Provision for credit losses on sales-type leases	(26)		—		(44)		—
Total rental income from sales-type leases	$	240	$	—	$	494	$	—

Contractual future lease payments to be received on non-cancelable operating leases as of September 30, 2025, were as follows (in thousands):


	Operating
2025	$	35,132
2026	132,402
2027	123,557
2028	106,436
2029	88,535
2030	73,885
Thereafter	544,031
Total future lease payments to be received	$	1,103,978

Minimum undiscounted lease payments to be received under our sales-type leases as of September 30, 2025, were as follows (in thousands):


	Sales-Type
2025	$	168
2026	112
2027	417
2028	725
2029	743
2030	762
Thereafter	141,291
Total future undiscounted lease payments to be received	$	144,218
Less: imputed interest	(134,251)
Total present value of lease payments	$	9,967
Unguaranteed residual assets	13,771
Total investment in sales-type leases	$	23,738